Markets fascinate me. I am intrigued by business and commerce, modeling complex systems, and developing new things. So, understanding the complex ways that prices move in financial markets, and discovering ways to profit from that movement, has always held my interest. Put simply, trading allows me to go to work each day looking forward to what I will see, learn, and do; all while getting paid for doing it.

Trend Trading Broad Markets:

I use technical analysis to implement a trend trading approach by identifying trends and then joining those trends on counter-trend retracements. Elliott Wave analysis will be used to identify the trend, counter-trend retracements, and trade entry signals. I will use technical tools including Ready. Aim. Fire!® Pro, DynaRange®, Spark Shooter, trend lines, market profile, Fibonacci analysis, and more as supplemental trade entry signals once both a trend and counter-trend retracement have been identified.

I use this approach on broad markets including equity indices, currencies, and commodities.

Short-Term Trading Broad Markets:

When Elliott Wave analysis suggests a market is in the strongest section of a trend, I will take intraday and other short-term trade setups. At other times, I will not trade intraday. Furthermore, this approach will be limited to only the most liquid and actively traded markets like the S&P 500 futures, Euro Currency futures, and Crude Oil futures.

Swing Trading Equity Options:

I use Elliott Wave analysis to form an opinion on the direction of U.S. equity markets more broadly. Then I will trade options on individual stocks in the direction of the broad trend using Voodoo Lines®, Ready.Aim.Fire!®, exponential moving averages, and The Squeeze to identify trades. I look for bullish opportunities with the Daily Bullish Continuation scan and 195m Bullish Continuation scans in the Simpler Trading Scanner as well as stocks on the IBD Growth 250 list. I look for bearish opportunities with the Daily Bearish Continuation scan and 195m Bearish Continuation scan.

Yearly:

My goals are matched to my approach. Larger trends cannot be manufactured by a trader. I have found that it is practical to find 2-3 tradeable, larger trends per year. My trading goals, therefore, are to catch 2 large trends each year in the futures markets. If I do this, profits will take care of themselves. I cannot, and will not, limit myself to only trading twice each year for several reasons:

1. There is no way to know when a trade starts or whether it will continue into a larger trend or not. Some which do not become long-term trends can be exited profitably and some will result in losses. In all cases risk management rules need to be followed. This requires that multiple trade attempts be made.
2. I will not stop looking for trades once goals are met. However, I will keep my focus where it belongs on looking for these larger trends and not be distracted constantly seeking the next entry.
3. Taking shorter-term trades is not precluded. In seeking longer-term trends, I will be monitoring markets and will inevitably find high probability setups. I allow myself to trade these setups when they meet my criteria for high probability trades, recognizing that chasing trades which look less than ideal does not advance my goals.

Yearly:

My objectives are constantly changing to direct my focus on a limited number of items which will further my ability to meet my goals. They are typically either known blind spots or activities which have been key to my success of which I need to be reminded. These are my current objectives.

• Continue to develop trading intuition.
• Allocate time to research new trading techniques and tools.
• Learn the trading strategies of others well enough to teach them myself.
• Remain patient until a trade fully sets up.
• Remain patient taking a first scale at the spot designated by a setup.
• Avoid re-entering a market after a successful trade without a specific setup.

​Futures, futures options, equity index options, stocks, and stock options

Depends on size of the move. Can adjust the timeframe of the chart so that the number of bars required to move from one line to the other is as close to 50 bars as possible.

Joining a trend in a broad market:

My objectives are constantly changing to direct my focus on a limited number of items which will further my ability to meet my goals. They are typically either known blind spots or activities which have been key to my success of which I need to be reminded. These are my current objectives.

1. On a longer time frame a trend (either up or down) where the Elliott Wave pattern is clearly incomplete.
2. On an intermediate time frame, a five-wave move in the same direction as the larger trend.
3. On an intermediate time frame an Elliott Wave corrective pattern which partially retraces the five-wave trend move.
4. On a shorter time frame chart, a technical signal that the market is returning to trend.

Fading for a reversal in a broad market:

Fading a major top or bottom is the trading version of a buzzer-beating three point shot from half-court. It is exhilarating, dramatic, and involves both skill and luck. While it can be rewarding, the opportunity for it does not come along every day. If I do not have a good all-around game, then I will not be on the court (let alone on the team) when chance presents itself. The ingredients for this trade are:

1. On a longer time frame, an Elliott Wave pattern which appears potentially complete.
2. On an intermediate time frame, an Elliott Wave pattern appears potentially complete.
3. On all shorter term time frames, Elliott Wave patterns which appear potentially complete.
4. At least a very small-degree move in the opposite direction and (ideally) a little counter-trend move to join the new direction.

Bullish equity option trade:

This is a trade to execute when the U.S. equity market is in an uptrend evidenced by an incomplete upward-moving Elliott Wave pattern observed in the S&P 500. When there is also a downward correction which appears plausibly complete, I will look to enter bullish options trades on U.S. equity names which are holding key moving averages selected from:

• Bullish Continuation scans from the Simpler Trading Scanner.
• Pop Squeeze Candidate and Pop Candidate scans from the Simpler Trading Scanner.
• IBD 50 Stocks. IBD Growth 250 Stocks.

Bearish equity options trade:

This is a trade to execute when the U.S. equity market is in a downtrend evidenced by an incomplete downward-moving Elliott Wave pattern observed in the S&P 500. When there is also an upward correction which appears plausibly complete, I will look to enter bearish options trades on U.S. equity names which are holding below key moving averages selected Bearish Continuation scans from the Simpler Trading Scanner.

Intraday / Short-Term trades:

In most market conditions, Short-Term trading is only for trying to enter larger moves with short-term trades to minimize risk. However, when a market appears to be in the middle of a larger-degree third wave, I will take a variety of Intraday setups only in the direction of the third wave move.

Enter a trade once all the elements of a setup have been observed.

Initial stops will be placed just beyond where the pattern leading to the setup becomes invalid. If the trade continues in the anticipated direction, and a spot closer to current prices would invalidate the expected pattern, then it can be used to move stops closer to current prices.

I will manage positions in multiple units so that if a trade goes my way I can take profit at different points.

Early Units:

Since many of my setups involve using short-term signals to enter a trade with the potential for a longer-term move, there is always the potential that markets move in the anticipated direction in reaction to the short-term signal, but don’t continue. I will take partial profits on early units at the objective(s) for the specific short-term signal. It is possible to trail a stop closely behind price once short-term objectives are met in order to exit, the purpose of early units is to reduce risk on positions and lock in profits, therefore, lean toward simply exiting at objectives. If objectives are nearby near the end of the day, especially if it is Friday, be more aggressive about exiting early units by either scaling out slightly shy of objectives, increasing the number of units exited, or both.

Late Units:

The purpose of late units is to stay with a move until it either: 1) reaches reasonable objectives for the setup; or 2) invalidates the setup. Therefore, the management is to wait until minimum objectives are met so long as stops at validity are not taken out. Once objectives are met, trail stops behind a fourth wave to allow the move to try and continue. In circumstances where there is a boundary that price is not expected to cross, and the reduction in unrealized profits between current prices and the stop exceeds reasonable profits achieved by staying in, I will consider exiting on a limit without waiting for a stop to get taken.

• Maximum 5% account value risked on any underlying instrument at any given time as a guideline.
• Maximum 10% account value risked on any underlying instrument at any given time as an absolute rule.
• A trade is considered to no longer have capital at risk once either: 1) stops for all units are in the money; or 2) profits from closed units exceed the loss if stops are hit. Once there is no capital at risk, additional trades can be made in the same underlying instrument.

Scan overnight news:

• Is there anything which the market is likely to react to?
• Will anything have the potential to affect scenarios from the day before?

Update Elliott Wave charts:

• For markets which trade overnight, update charts and consider if the patterns have changed.
• For SPX, where is implied open based on ES trade? Does this change scenarios for the day?

Update ES Market Profile:

• Mark position of overnight high, low, and midpoint.
• Is price signaling a gap?
• Is price suggesting a move out of balance?
• What are important reference points to note for the day based on current prices?

Review open positions:

Is the management plan for any open positions affected by the implied open?

Prepare plan for the day:

• ​Identify an objective for each symbol active for the day.
• Prioritize symbols to watch.

Update trade documentation:

• Review execution logs on each platform and ensure that trade documentation is complete for all trades during the day. If not, fully document all trades while they are fresh.

Update Elliott Wave analysis for active markets:

For each market which I am actively following using wave analysis, review the charts:

• Are any scenarios invalidated?
• Does price action suggest any new scenarios?
• Have the most likely scenarios changed?
• What are the key things to look for tomorrow?

Update Market Profile Chart:

• Move High/Low/Close lines.
• Note if the day had prominent points of control, unfilled gaps, or any other notable features.

Review stocks with open positions:

• Are decision levels changed?
• Are there decisions to make tomorrow?
• Update alerts.

Review stocks on watch lists:

• Update decision points based on current charts.
• Update alerts.
• Remove if setups are broken.

Review Scans:

• Scans to watch depend on market trends.
• Add any promising stocks to the watch list.

Overall Market Review:

• Review end-of-day internals and market metrics.
• Check other conditions i.e. Hindenburg Omen, Zweig Breadth Thrust, % above/below MA charts, etc.
• Which markets are trading correlated, which aren’t?

Ponder market scenarios:

• Markets are always trying to achieve something. What is it?
• Do I have a good sense of what is likely to happen tomorrow? If so, what would confirm and what would refute it?
• If there is not a clearly preferred scenario, what will be the biggest clues?

What Tools will I use for my trading business? ​

• Charting: MotiveWave, TradeStation, ThinkOrSwim, Sierra Chart
• Stock discovery: Simpler Trading Scanner, IBD
• Options analysis: ThinkOrSwim Documentation and notes: SnagIt, OneNote
• Market data: DTN IQFeed

Voodoo Lines®, Ready.Aim.Fire!® Pro (Classic Ready.Aim.Fire!® can also be used).

Contemporaneous trade documentation:

Capture a chart at each entry, exit, and adjustment. Note the logic behind the action if not obvious. For options trades, capture the options chain and, if appropriate, capture TOS analysis tab. Capture information for any trades not taken at the end of the day. Decisions not to trade need to be reviewed alongside trades taken.

End-of-day review:​

At the end of each trading day, I have two tasks to accomplish. The first is to ensure that trade documentation is complete. Sometimes events during the trading day preclude complete documentation and, in those cases I want to fill in the details while things are still relatively fresh. The second activity is to ensure that I am not trading in a self-destructive manner. Daily course correction is usually too frequent; one more day of trade results will generally not alter a statistical analysis of trading results. However, when reviewing the day’s trades, also note if rules are being broken. If so, corrective action must be taken immediately and not delayed. This is the only review I will do more frequently than once per month.

Monthly review:

Approximately once a month, usually on the first weekend after the end of the month, I will conduct a more comprehensive review of results. This review starts with organizing and tabulating the results. Among the things which are recorded for each trade are:

• Market.
• Time frame.
• Strategy (which trade strategy was implemented). P/L.
• Purpose (Why was this trade taken ex: core strategy, hedge, pilot, adjustment to open position, lotto/flier, experiment/R&D).
• Exit reason (target, stop for loss, breakeven stop, stop for profit before target, stop for profit beyond target / runner) expressed as a % of units for each reason.
• Planned? (was this a trade idea on my watch list at the start of the trading day.) Priority (ranking 1-3 of how important it was to get in this trade).
• Conviction (ranking 1- 3).
• Environmental factors: trend, market internals, macroeconomic environment.
• Strategy-specific metrics (certain Greeks for certain options strategies, short interest for high short-interest strategies, etc.)

There is no set process to analyzing the results once tabulated. I do glance at summary metrics like year-to-date P/L, win %, and what types of trades are current focus. These provide context and beyond that I just roll around in the data guided by a number of prompts such as:

• What stands out? What is working? What isn’t?
• Step back. Are there patterns which don’t break down with the categories being tracked? Do these suggest tracking other metrics?
• Can any element of performance be linked to the environment? Does it suggest adjustments to what to trade now? Does it suggest adjustments to environmental considerations for any setups?
• Does anything need to be fixed? If so, what is the investigation/action plan?
• What could make results even better? What is the investigation/action plan?
• Do the results suggest any new tools I should create?

Semi-Annual review:

On a less frequent basis I will step back and ponder some bigger questions. This is less about reviewing data and more about reviewing both goals and process. I conduct this broader review twice each year at the beginning of February and the beginning of August. Prompts I consider are:

• Why am I trading? Is it still the same? Am I still happy doing what I am doing?
• Do I need to make any adjustments to how I trade?
• Ponder any adjustments to goals, objectives, and approach. Revise as needed.
• Review overall process. Am I adhering to it? Is it an effective way of managing myself and managing results? Are there adjustments to make?

Evolution, inspiration, and innovation are key to my trading. I cannot know where ideas might come from, therefore I will seek to learn what I can about a wide variety of topics even those which do not immediately have any obvious connection to trading.

Market intuition is a thing. It is a codeword for the ability to process more inputs of information generated by the market than can be factored into the rules of a single setup. I will work to continue developing my trading intuition. At the same time, I recognize that if taken to the extreme this could be a free pass to ignore rules completely. It is much easier to monitor discipline when there are hard and fast rules to be followed. In this context, however, discipline is determined by how strictly I adhere to my review process and how honest I am with myself in that process.

There is nothing more golden than the plan. The plan is the rule and the rule is the plan. There is plenty of trading wisdom out there and plenty of witty aphorisms out there and many of them resonate with me. If they are important and they will affect my trading, they belong in the plan.